governance, political economy, institutional development and economic regulation

Posts tagged ‘Uttar Pradesh’

African “big men” in India

African heads of State will don Modi kurtas and party in New Delhi, October 27 to 29. The occasion is the third meeting of the Indo African Summit. It would be quite a sight to see Robert Mugabe, age 91, President of Zimbabwe for the last two decades, take a turn or two on the dance floor. But we may have to make do with the more agile President Jacob Zuma.

zuma

President Jacob Zuma of South Africa at his agile best

Hopefully, the parallel with ASEAN will not extend to Minister Sushma Swaraj having to sing at the concluding party, just to liven up the proceedings, along the lines of Madeline Albright, US Secretary of State in 1997, who crooned her version of “Don’t cry for me Argentina”.

swaraj

Minister Sushma Swaraj with members of parliment

Beyond the theatrics, it is tough to figure out what we want to achieve with the possibly forty heads of state or governments and many more senior politicians and officials from Africa who are expected to participate. Similar summits were held in 2008 and again in 2011.

Claim the 21st century for Africa and India

Demographics suggests that the second half of this century belongs to Africa and India. But to claim this “historical destiny” India and Africa have to do the right things. One such is to put the right institutions in place.

This “mirror” long term need is what binds India to African countries far more than the standard diplomatic fare; trade and investment, terrorism and security. These are merely the transactional outcomes of sound institutional development and better dealt with at specialized fora which already exist like the World Trade Organization, the United Nations and the Bretton Woods institutions and their offshoots.

Context is key for developing “best fit” institutions. Context varies enormously between India and Africa and even more so within Africa. But one common theme across most African countries is a rich endowment of natural resources (except Rwanda and Burundi) which distinguishes them from resource poor India.

In contrast, adherence to broad democratic norms is increasingly the preferred option across Africa. Swaziland and Lesotho remain the only kingdoms in sub-Saharan Africa. Yesterdays “dictators” are today’s leaders, who test their popularity in elections.

museveni

Presidents Yoweri Museveni of Uganda and Paul Kagame of Rwanda

India has been the world’s largest democracy since 1947. In Africa Senegal has similarly been a multi-party democracy since 1960 when it became independent. Senegal had its “Indira Gandhi moment” in the first decade of this century when then President Wade tried to unduly empower the executive through constitutional amendments. The democratic backlash was strong and he lost in elections to his own Prime Minister in 2012- President Small still leads today. Mauritius, Kenya, Tanzania, Zambia, and later South Africa, Botswana and Namibia also have stellar democratic records.

African public service structures have evolved unlike ours which have atrophied

The institutional architecture within which government functions is critical for achieving developmental goals. Within the broad institutional architecture the manner in which the civil service is structured is key. India has much to learn from select countries. South Africa, Ghana, Senegal, Mauritius, Kenya, Tanzania and Ethiopia for instance, have developed and maintained outstanding public service structures and traditions.

These bureaucracies have weathered far more tumultuous times than we in India have ever encountered in the post- World War II period. But they remained committed, motivated and deliver results- three characteristics that are iffy to apply across the board in India.

India presents a fascinating case study of asymmetric development. On the one hand we have scientists sending space expeditions to Mars. At the other end poor villagers still rely on traditional healers and “bangali” doctors- sometimes out of choice and habit but mostly out of compulsion since the public health service is so poor.

It is fashionable today to advocate the case for asymmetric development- getting reform in through the door wherever possible without attempting an across the board improvement in the civil service. India is a good example of how this does not work. Islands of excellence remain just that cordoned and insulated from the ills that afflict service areas not considered critical from the short term (sighted) point of view.

India manufactures or assembles more brands of cars, scooters and motorcycles in India than it is possible to remember. We pride ourselves on our in-house capacity for developing infrastructure. We have embarked on a “make in India” mission. Foreign students come to India to study management, medicine and engineering.

Yet, within the government, it is rare to find an official with the relevant technical qualifications, in a senior position with decision making powers. This is not to say that our top bureaucrats are not highly educated. Invariably they do have these credentials, in a general way. Many may even be a PhD. It doesn’t get better. But rarely is it that the academic qualifications and the experience overlap. This disregard for “technical excellence” as a driver of good public administration is at the root of our inability to apply the vast knowledge reserves we have built up to improving public services on the ground.

We should learn for countries in Africa which have done away with the hierarchical, cadre based, colonial administration systems they inherited and have moved on to a position based meritocracy. South Africa, Mauritius, Ghana, Senegal, Kenya and Tanzania are examples.

Our federal structure is an outstanding example of contextual decentralization

Whilst our Constitution is a Union of States rather than being a federation like the US Constitution, it is a dynamic yet robust instrument. It has been amended one hundred times since 1952 but it remains the driving force for growing the “Idea of India” as a single nation comprising unparalleled diversity in religion, ethnicity and culture.

Much of richness of the Indian public management experience derives from the significant levels of devolution to the thirty state governments. Around 40% of the Union government’s revenues are made available to state governments as their share of tax. An additional 15% of funds are transferred to state governments for executing national development schemes. State governments also have their own sources of revenue.

The size and character of states varies enormously in India. These range from the mammoth Uttar Pradesh (UP) with a population of 200 million (the next biggest state is Bihar with pop. 100 million) to tiny Sikkim population 600,000.

Uttar Pradesh is larger than the largest African nation-Nigeria-pop. 189 million, renowned for its oil rich economy, entrepreneurial people and pluralistic society.

Sikkim, sticking out like a “thumbs up” between Nepal and China in North Eastern India with streets neat as a pin and people, as disciplined as the Rwandans closely resembles the well governed, gorgeous, North Western African island nation of Cape Verde.

verde

Cape Verde

Africa manages regional co-operation exceedingly well

India should look closely at the cross country arrangements within Africa which facilitate development based on the comparative advantage of countries. Power pooling across the Southern Cone countries and West Africa is one such example. Access to sea routes for land locked countries like Zambia, Zimbabwe and Uganda via rail, road and pipelines provides good models for cost sharing across Indian states. Truth and reconciliation type negotiations are another African specialty.

bashir

Presidents Bashir of Sudan and Salva Kiir of South Sudan- friendly foes.

The Indian institutional arrangements for regional integration have fallen into disuse and are ineffective. Water sharing arrangements are particularly dissatisfactory and legal disputes linger for years, increasing conflict and retarding development. Similarly implementing the Goods and Services tax- a single, value added tax, to replace state level taxes on the production and sale of products, to which all parties are agreed in principle, has become harder and more painful than extracting a tooth.

It may have been really useful to arrange sessions where state chief ministers could have interacted with heads of state depending on areas of mutual interest with their officials following up on the detailed areas of cooperation.

We are not China

aarti

aarti” evening prayers on the banks of the Holy Ganga

Finally how can we  differentiate ourselves from China whilst dealing with Africa? Clearly the worst option would be to emulate the muscular Chinese style of economic diplomacy. For one we just don’t have the firepower. For another the principle of comparative advantage advocates that everyone must play to their strengths.

China’s comparative advantage is cash-lots of it. But the Chinese model of development is not something which is easily replicated because of the size of its economy, the homogeneity of its population and its long history of splendid isolation. Also it is unlikely that exporting workers in droves to implement projects overseas is a sustainable or effective developmental strategy for the beneficiary countries.

Our comparative strength is that we are the “Constantinople of Parliamentary Democracy”. We straddle the democratic heritage of the West and the traditional Asian democratic principles. In doing so we have evolved a home spun democratic model. Like all jugaad (learning by doing) the ends of this model are a bit jagged.

parliament

The Indian parliament on high alert post a terrorist attack in 2001

Nevertheless, it is a model which works- both for economic growth and to uphold the human liberties of speech, association and property. Within this generic model of development lie gems of granular achievement at the state government and local level, which provide solutions to the universal development barriers of elite control, low initial capacity, nascent institutions and less than adequate rule of law mechanisms.

India must use the Summit to share these nuggets of experience which are at the heart of building institutional resilience for sustainable development in poor countries.

1542 words

Beef and Toor fry BJP in Bihar

The national hype around the “beef ban” issue and the rise in the price of toor daal has done what the combined political force of other parties could not do — humble Narendra Modi in Bihar. Both are self-goals by the Bharatiya Janata Party.

humble modi

photo credit: http://www.arun-wicfy.quora.com

Whose duty is it anyway to regulate agri. and food?

The regulation of land, agriculture and food is a mandate of the state government in the Constitution. But Central governments, including the BJP, have been happy to meddle in this mandate via the provision of trade and commerce in food in the Concurrent List of the Constitution. They do so to appear muscular and confer favours on farmers, traders and consumers. The setting of procurement prices for food crops at much above the market price, the physical management of publicly-owned food stocks and the subsidisation of consumer prices are low-hanging fruits for both populism and patronage.

Far better if the Central government had stayed clear away from this area and told voters frankly that it was for the Bihar government to manage the price of daal. On the beef ban, the BJP should have stuck to the constitutional position that the cow is to be “preserved” per the Directive Principles, and it was for state governments to decide local policies regarding preservation.

Instead, the BJP ground troops have raised a national ideological furore over a non-issue. Beef is an inferior meat internationally because of its adverse health (high cholesterol) and environmental (high carbon emissions, high water consumption per unit) consequences. In India, it is an inferior and cheap meat, eaten mostly by the poor. Rich Muslims would rather eat goat or chicken biryani, much like Hindus and Christians, rather than beef.

But it was not to be. It seems the BJP ground troops will not easily allow Prime Minister Modi to grow out of the narrow, Hindu, nationalist role they have set for him. This was expected, but what is surprising is his inability to control the foot soldiers.

Bihar matters

Winning in Bihar would have raised the Prime Minister’s image of “invincibility” sky high. The “crabs” within the BJP would not have liked this. They were happy to hang on to his kurta tail and be carried along by the tsunami in 2014. Now that the next day of reckoning is only in 2019 — a full four years away they prefer a Prime Minister, dependent on their individual support. What could be a better opportunity than to play the Hinduism-under-threat-from-beef card in the middle of the Bihar elections?

On the price of lentils, Mr Modi’s penchant for muscularity is primarily to blame. It is not the job of the Central government to keep prices in check. State governments should have mechanisms for doing this. Importing food in short supply from outside the state or from overseas to keep prices regulated is one option. But, more importantly, isn’t it about time our governments got away from the business of setting market prices for all segments of the food value chain?

Re-regulate agriculture and food

Price spikes and troughs provide important signals to growers and traders, and dictate what farmers sow. Expectations of price intervention by the government distort these signals and inhibit farmers from their legitimate right to profits when a crop fails just as they would suffer a loss when there is an oversupply.

To insulate poor farmers, farm workers and poor urban folk from extreme price fluctuations, direct cash transfer is the answer. Who can say what consumers would do with the extra cash the government gives them? They may not buy toor at astronomical prices at all. They may opt for other, cheaper varieties of pulses — moong, masur or channa, or prefer milk, meat, lobia or nutri nuggets, or a mix of all these.

Is there a BJPnomics?

The BJP has yet to grow a coherent economic philosophy. Often it glories in being market and business-friendly. At other times it shies away from this label, just like the Congress Party, because it is perceived as being anti-consumer. Many within the BJP are more socialist than the communists! They want to preserve the public sector and they want visible, often unnecessary, intervention by the government in everything — what to wear, what to read, what to see and what to eat.

This ideological clutter needs to be cleaned out. Otherwise, the BJP risks looking like a more stridently Hindu version of the Congress, rather than a modern, nationalistic party which believes in markets, equity and inclusive growth.

Next two years- a blur of elections

The good news is that the Uttar Pradesh elections are still one year away and there is still time to repair the damage for a “real” contest between the Samajwadi Party and the BJP. The Samajwadi Party is a homegrown party of Uttar Pradesh with an indifferent governance record. It is perceived as a dynasty, caters mostly to Ahirs and enjoys strong support from Muslims via their champion Azam Khan of Rampur — the erstwhile “princely state” in western Uttar Pradesh, adjoining Moradabad.

azam khan

photo credit: http://www.indianexpress.com

An understanding between Bhenji (Mayawati) of the Bahujan Samaj Party and the BJP would strengthen the Prime Minister’s hand to define the electoral line-up. Both the BJP and Bhenji, have a good record in the management of law and order, and both appeal to the rainbow spectrum which Bhenji tried to create earlier, spanning the upper castes and the dalits. This consolidation is what the BJP attempted in Bihar. It remains a viable strategy for Uttar Pradesh despite the outcome in Bihar. It will also be useful for the BJP in adjoining Uttarakhand in 2017.

bhenji ambedkar

http://www.rakeshjhunjhunwala.in

But it is a long way to the Uttar Pradesh elections in 2017, past Pondicherry, Assam, Tamil Nadu, West Bengal, Kerala in 2016, and, thereafter, Goa and Punjab. The BJP would do well to be conservative and focus on Assam, Kerala, Goa and Punjab, leaving the other states to regional partners. Selectivity of political effort will free the central leadership to also do some work in pushing the reform agenda in tax, infrastructure and digital governance.

Unlike in Bihar, the BJP must start grooming regional leaders in all these states so that it is not a solo effort by the Prime Minister. Identifying regional leaders broadens the table and gives more elbow room all around commensurate with the size of India. Inclusion is of the essence in a democracy.

Adapted from an article by the author in Asian Age October 23, 2015 http://www.asianage.com/columnists/beef-toor-frying-bjp-bihar-058

Lion King – India roaring?

Lion

(photo credit: http://www.archives.financialexpress.com)

Prime Minister Narendra Modi’s adoption of the Asiatic Lion as the symbol of “Make in India” has triggered off a debate. The lion — Gujarat’s state animal till now — has become ubiquitous. The brilliant, public brand developer, Amitabh Kant has made the lion near synonymous with Incredible India, as Dalda once was for ghee (clarified fat).

The lion now appears in tri-colour ruffles; bedecked with flowers; impaled by pistons, wheels and gears; outlined in bright LED lights or most elegantly just in a steely grey profile. The message is clear — India is not a power you can mess with.

Of course, the truth about the lion — but not the lioness — is that it is the laziest big cat ever. It uses its overpowering muscle mass and speed to forage for food; overeats voraciously and then sleeps contentedly barely able to control its snoring. But just the sight of its mane; its magnificent rock cut nose and jawline; its arrogant gaze and its tawny coat can bring on the goosebumps, absorbing the viewer for hours on end. The lion is not king without a reason.

In comparison, the Bengal Tiger — India’s national animal — is a furtive large cat which slinks about in the dense undergrowth. Whilst magnificently graceful and elegantly clad in striking stripes, it relies on strategy and guile in making its kill. Lions are more transparent. They hunt in a pride and can even take down an elephant. The tiger is a solitary hunter and can even be done in by a pack of wild dogs.

Which of the two suits India’s image best? Today’s “muscular” India is closer to the lion than the tiger. For the longest time, through the 1970s, ’80s and till the 1997 financial crisis, East Asia was known for its fast growing “Tiger economies” — tightly managed, efficient, lithe and opportunistic.

India is far from that model. We are too big to emulate the East Asian steps or use the entry points available to them — FDI in electronics and automobiles from Japan and later China and external trade drive growth. We are too diverse to have a single model fit all requirements. The “Pride of Lions” model suits us best — group effort; selection of the fittest amongst the group to lead and a strategy which leverages our size and inherent strength rather than rely on our low levels of flexibility or the accompanying moderate speed.

Valmik Thapar — India’s best-known Tiger conservationist — suggests that adopting the elephant suits India best. In fact, the elephant is the state animal of three Indian states — Kerala, Karnataka and Jharkhand. But elephants can’t dance, jump or dunk. They do have prodigious memories and are very community minded. Elephants will mourn a dead member of the herd for considerable periods and are very human in their reactions to loss and their fondness for a drink when the Mahua fruit ripens.

But its ponderous pace reminds us of the bad old days of the Hindu rate of economic growth. Its high maintenance — a daily feed of 140 kg and water consumption of 120 litres is the kind of resource intensity we need to get away from.

Its proclivity for making false charges and trumpeting to scare off the enemy is too close to the regressive character of our political discourse today.

Its unfortunate tendency to defecate in large quantities at inconvenient locations is so similar to the India we are already used to, that it just cannot become a symbol of what we want to be. I suspect even Mr Thapar would agree.

In fact, most likely, his apparent willingness to forego the “national animal” status for the Tiger — his first love, in favour of the elephant, seems to be a red herring — a canny move to propose a substitute so impossible, that it can mire action in discussions for the next decade, thereby maintaining the status quo, which suits Mr Thapar best. This tactic is familiar to every well-trained bureaucrat and part of her arsenal of tactics for blocking change.

But move away from the tiger we must. Here are three key reasons for doing so. First, we would thereby enable its adoption by West Bengal, which currently has to make do with the unglamorous “fishing cat” as its state animal. This is unbecoming for a state where the mighty Sunderbans Tigers prowl. Also, Bengalis in India can never digest the fact that Bangladesh has unfairly appropriated the Royal Bengal Tiger as its national animal leaving them with just a cat. The recent Communist governments in West Bengal never bothered about this because for them all cats are the same. In any case, in the “man versus wildlife” debate, they are squarely on the side of man. Prior to them, the Congress government was a mere handmaiden of the Union government. Didi (chief minister, Mamata Banerjee) now needs to right this wrong.

Second, despite being the national animal and thereby enjoying the VVIP special security arrangements of Union government-funded tiger reserves, the tiger population in India has not stabilised. In contrast, Mr Thapar notes, the lion population in Gujarat has increased, thanks primarily to the proactive conservation efforts of the state government. The lesson is clear. If the tiger is to be saved, name it as the state animal of West Bengal, Uttar Pradesh, Madhya Pradesh and Rajasthan so that state governments develop a direct stake in its conservation.

Third, the question of naming the Indian elephant as our national animal does not arise. It is a beautiful animal and we don’t want to lose it by elevating it to this status.

But if the “national tag” is the kiss of death, what hope is there for the Asiatic Lion to survive its de facto national status? Here we have to pray that the “Lion” that we have as the Prime Minister, currently, will look after his own, just as he did in Gujarat.

In case Mr Modi does not deliver, we could always switch to naming rodents as our national animal and at least be done with them forever.

Reposted from the Asian Age June 6, 2015 http://wwv.asianage.com/columnists/king-industrial-jungle-282

PM Modi “let it be”

mother mary

PM Modi should consider listening to the “words of wisdom” in the famous 1970 Beatles hit –“Let it be”.

Of course in this cruel results centric world of ours, only those who get going fast and hard survive. But there are virtues also to sometimes take a call and just let things be.

Take for instance the manner in which BJP is keeping up the electoral rhetoric. Amit Shah the BJP President is everywhere exhorting voters in Bengali and Tamil to vote BJP. The adoption of “shock and awe” tactics- the use of such overpowering force that it leaves the enemy convinced that defeat is certain and thereby demoralizes them- is useful especially since the BJP is adept at using technology and has “Sangh boots” on the ground to realize this tactic in real life. Such tactics may work, but not against an extremely well organized and determined enemy- like the Afghans or Kejriwal.

In fact Kejriwal would welcome the adoption of the tactic in Delhi to magnify his underdog status and “David versus Goliath” effect. Ironically, in Delhi the BJP is painting Kejriwal as the “shock and awe” man with an Rs 100 crore election budget. Be that as it may but Kejriwal’s electoral base amongst the poor and the Muslims seems intact and he will give the BJP a rum fight.

The real question, is should PM Modi bother about Kejriwal? Some fights are best lost. After all India would lose its democratic plurality if every Indian state government from Kashmir to Kanyakumari became saffron-the BJP colours.

A ceaseless election rhetoric also has the downside that it does not allow the adversarial environment to cool down for the business of governance to commence. This the BJP can ill afford since it has built its election agenda around performance and shall be judged accordingly.

If Parliament cannot function harmoniously; if state governments get deadlocked in confrontation with the center, the development agenda, the BJP so desperately needs to implement, will remain just good intentions and plans.

The dilemma confronting the PM is starkly outlined by the Mid Term Economic Analysis 2014-15, the first document authored by the new Economics team in the Ministry of Finance, headed by Arvind Subramanian.

The Analysis notes that all through the period 2007 to 2010 it is private investment which led growth. It acknowledges that private investment has dried up. Corporates are deep in debt- partly due to their own greed in lapping up cheap debt because all through this period, inflation rates exceeded interest rates making it a no brainer to access debt- but also because investments have not resulted in revenues and remain locked in incomplete projects bedeviled by land unavailability; fuel shortages; contractual disputes; scams; and hold up in environmental approvals.

Rapid institutional reform (the underpinnings of good governance) could attract private investment for growth but the Analysis is starkly honest and pessimistic about the possibility of institutional reforms in the near term.  Apparently the PPP model is “broken” and cannot be fixed in the near term. Ergo the only available, albeit second best option, is to pump up public investment to compensate and hope to kick start private investments.

The efficacy of a public finance led growth option is not the topic of this post. The dangers are well known. No amount of public finance can fix a “broken” system. The more we rely on public finance led investment; national champions and a necessarily interventionist government; the deeper we slide into the morass of mega scams; gold plated projects; monopolies; tariff walls to “nurture” the consequential white elephants built using public finance and a further erosion of state credibility. This is exactly what the opposition wants to happen, so PM Modi should beware.

Political nirvana lies in sticking to the path the PM propounded when the country voted for him.

First, work doggedly to reform institutions in the near term. The near term is not as near as the next budget in February 2015, it is till end 2015 by when election fever will grip Bihar and then Uttar Pradesh. This can be done by building a team of selected state governments, the higher judiciary, Parliament and the trade unions all working to a minimalist institutional reform plan, which stops at causing unbearable (and uncompensated) pain to any one actor. That is the essence of democracy.

Second, PM Modi should rise above the metric of stock market numbers. What matters to him is an improvement in the lives of the average voter.  These are not people who live or die by what is happening on Dalal Street. Stick to the “micro economic” problem of making their lives better and here we have a problem. The ongoing deflation (reduction) in rural wages, as the Analysis maps, is not a desirable outcome for the poor, especially in an environment in which government servants are 100% inflation indexed.

But above all the PM has a political choice to make. Is it better for the BJP to continue to hog headlines via an adversarial electoral agenda or reserve the “shock and awe” effect for later in 2015 when preparations for Bihar and then Uttar Pradesh elections kick-in?

He would be well advised, in these troubled times, to “listen to Mother Mary and let it be”.

(This blog is dedicated to my Grand Nephew Angad Ahluwalia, age 6, whose favourite song is “Let it Be” and whose current ambition is to be a Lead Guitarist in a band.)

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